Meredith Whitney – I would not own bank stocks

• Meredith called it the great government momentum trade
• Banks rallied from 1x tangible book multiple to almost 2x tangible book multiple in such a short amount of time
• Underlying core earnings power is negligible
• With government involved rules keep on changing in the middle of the game.
• Last year market impacted the economy, this year economy is going to impact the market.
• Credit contraction is happening at an accelerating pace.

“Consumer spending will be lower than people expected.” – Meredith Whitney

• So many businesses that are going to have lower revenue stream in the banks.
• After they sell securities, their asset base is going to be lower, their earnings base is going to be lower.
• Bottom line, earnings are going to be manufactured for all these banks.

Source: CNBC